Estate Law Articles
10 Mistakes That Tear Families Apart and Cause Children to Suffer
Mistake #1: Relying on “Ontario’s Estate Plan”. If you do not set up an Estate plan, upon your death your property will be distributed according to the laws of your last Province of residence. The law may require the probate judge to give your property to someone other than the person(s) you would have chosen.
Mistake #2: Relying on a Will. If your Estate plan consists only of a Will, your beneficiaries may face many costly problems, such as probate proceedings. True, a Will is the most common estate planning tool, but it may not be the best tool to use.
Mistake #3: Relying on Joint Tenancy. Almost everybody owns their bank accounts in Joint Tenancy. Yet, Joint Tenancy often causes families horrible legal nightmares. You have many options that are better and safer than owning property in Joint Tenancy, and they come with much less risk.
Mistake #4: Relying on Community Property laws. Relying on the Community Property laws is a position many Clients take. However, as in Joint Tenancy, your property will still have to go through probate on the death of the spouse. Also, as in Joint Tenancy, Community Property ownership requires a guardianship appointment if a spouse is incapacitated and the home needs a mortgage, home equity line, or to be sold unless a Power of Attorney for Property is in place. Relying on the Community Property laws is not a plan.
Mistake #5: Relying on Guardianships. These Court-supervised proceedings for addressing your physical or mental incapacity are costly, time consuming and burdensome. When you put Powers of Attorney in place or when you set up a Trust and transfer your assets into it, you generally avoid the need for a guardianship to be put in place.
Mistake #6: Relying on a gifting program as your way of avoiding probate. While this is an effective way to reduce the size of your Estate, it has its downsides, the first and biggest of which is that you lose control of the assets you have given away.
Mistake #7: Relying on the Courts to take care of your child’s finances. If you die intestate (with no Will) or with only a Will, and your property passes to your minor child, the Court will put your child’s money into effectively a Court-supervised guardianship. In some cases, this is best, but not most of the time.
Mistake #8: Relying on a Will kit for your Will or Trust or Powers of Attorney. One size does not fit all because no two people or families are alike. Do you know even one family whose concerns are the same as yours? From your family’s needs and dynamics – to personalities and values – can you imagine any form kit ever being suitable for any family? If you use a form kit, you’re asking for problems. More often than not, the forms are not completely properly with the result that the documentation is ineffective and invalid. The only Estate plan you can rely on is one that is custom prepared by a qualified estate planning lawyer.
Mistake #9: Relying on a lawyer who uses boilerplate Trust documents to provide for your spouse and children. When you create your Testamentary Trust, you and your lawyer have the opportunity to write specific instructions about how you want to provide for your surviving spouse and children. If you overlook this opportunity, your family will receive whatever care the one-size-fits-all form documents provide. Sometime that is applicable, if for example, you might have more children and you do not wish to have to do a new Will in that event. But more often, a specially tailored Will is best.
Mistake #10: Relying on the wrong lawyer. Most lawyers know very little about estate planning let alone how to properly draft and interpret a Will. Your real estate lawyer, for example, likely knows very little about Will interpretation, laws relating to Abatement and Lapse quite apart from the Taxation of Estates and Trusts. What’s more, non-estate planning lawyers often don’t put much time or energy into a Minor’s Trust or ensure that the proper gifts over are in place to make certain that your Minor beneficiaries cannot simply demand the funds upon reaching the age of majority. Responsible parents realize a Minor’s Trust is the most important part of their family estate plan.